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Sweden green steel needs lower power, higher CO2 prices

(Montel) A Swedish pilot project to demonstrate steel production without CO2 emissions will require an electricity price below EUR 26/MWh and a carbon price above EUR 132/t to be more profitable than the developer's current business.

The projections of power and carbon prices for green steel production emerged from a report by the Scandinavian Institute for Public Policy, published on Tuesday, on behalf of a pilot project organised by Swedish steel producer LKAB.

Under current market conditions, the front-year Nordic power futures contract is hovering above EUR 41/MWh and Europe's benchmark carbon price is below EUR 66/t.

LKAB previously said it planned to complete the pilot by 2026, a project that would assess annual power consumption of 5 TWh.

The institute said it would make more financial sense for the company to focus on producing high quality steel pellets, based on global demand expectations.

Another Swedish steel company with green ambitions, H2GS, criticised the power and carbon cost figures mentioned in the study. The cost figures would make H2GS steel production among the most expensive in the Nordic nation.

"The numbers are based on assumptions which are not grounded in reality,” the company’s head of sustainability, Lina Haakonsdotter, told Swedish business daily Dagens Industri.

She said the price projections also failed to account for how much customers were willing to pay.

Both steel projects are located in northern Sweden, where power prices have traditionally been low. However, increasing industrial electricity demand in the region is expected to lift prices there in the coming years.

(EUR 1 = SEK 11.33)